August 5, 2012

HTC Second Quarter Profits Down 60 Percent

HTC lowered their financial outlook on Friday after seeing revenues drop by more than a quarter and profits fall by nearly 60% during the second quarter, various media outlets have reported.

According to Apple Insider writer Daniel Eran Dilger, the Taiwanese smartphone manufacturer reported that revenues had dropped by 27% and operating profits had plummeted by 57% during versus the same three-month period in 2011.

While HTC fell short of analysts' expectations, the news wasn't all bad for the firm. Carly Page of The Inquirer reported that they experienced a 34.3% growth over the first quarter of this year. Nonetheless, the Droid, One, and Evo series manufacturer was forced to lower expected third-quarter revenue to between $2.3 billion and $2.7 billion.

In a statement addressing the company's fiscal performance, HTC officials cited "intensified competition in the smartphone market" and "global economic weakness" as factors contributing to their recent struggles. To rectify the situation, they plan to "strengthen execution to get ahead of competition" and "deliver a comprehensive range of products to offer customer choice."

"HTC was once a rising star, posting regular sales gains as a primary, higher end Windows Mobile licensee. It then partnered with Google in 2008 to introduce the first Android phone, Dream/G1, and has since continued to produce both Android and Windows Phone 7 models," Dilger said. "However, unlike Samsung, HTC primarily makes only higher-end smartphones, putting it into direct competition with Apple, the only other mobile vendor focused exclusively on the premium smartphone market."

Last month, rumors surfaced that HTC could be involved in the production of the oft-rumored Facebook smartphone. In late July, sources familiar with the matter told Bloomberg reporters Tim Culpan, Adam Satariano and Olga Kharif that the device would also utilize Google's Android OS and could be released by the middle of next year.

Given Facebook's popularity, such a device could help reverse HTC's fortunes, but not all tech experts are convinced that the device -- assuming the rumors are true -- could be a game-changer.

“The issue here isn´t whether Facebook could develop a smartphone – it could, especially if it has help from the likes of HTC – but whether it can successfully market such a handset,” ZDNet´s Adrian Kingsley-Hughes said.

“Introducing to market a new Android handset with a few Facebook-specific tweaks is unlikely to work because people can already access what they need from Facebook from existing mobile hardware," he added. "The idea that Facebook is going to be able to convince people to buy a Facebook phone just to see ads is ludicrous.”